>> from bloomberg world headquarters in new york i am david westin. the balance of power for the world of politics meets the world of business. from london, trying minister paris the may -- prime minister theresa may's fight to keep her job. china's reported move away from its made in china 2025 program and kevin cirilli on the threat of a government shutdown on december 21. we started the day with theresa may being attacked by her parliament. how does it look as she goes into this conservative party meeting? >> i missed the question. her prospectse going into the conservative party meeting she will have in a few hours? >> her prospects are looking

good. we have been running the numbers and it looks like more than half of her mps with backer which means she should win this -- would back her which means she would win this confidence vote. does a narrow victory helper position, it probably doesn't. the competence of much of her party already. david: i didn't realize you are outside my parliament. i will come back to you in just a minute. we're going to go to washington and talk to shaun donovan on trade. we had this report that china might be backing off of china 2025, do we believe them? >> we are learning what they are planning. our team in beijing has been able to confirm that china is looking at reconfiguring this made in china 2025 plan. that would be a big victory for the trump administration in its trade wars. it has been a big target. the question will be whether

china delivers and how they deliver. a lot of skepticism here in washington that beijing will have to live up to. david: to that point, how will we know whether they are delivering? something of a history with talk nice butey not delivering the goods when it comes to trade. >> that is exactly it. this fits the pattern we have seen from beijing over and over to make big promises. the trump administration has been right in saying beijing has not lived up to those promises. in the past one of the telling details, our folks in beijing are hearing that part of the plan is to delay made in china 2025 by 10 years so it becomes made in china 2035 and that becomes a big amorphous thing that we may not know until 2035 how this happens. they go well beyond the trade wars. it has been edging in to see how the trump administration plays this. david: we will stay in washington and go to kevin's a really come our chief washington reported. -- kevin cirilli come our chief

washington reporter. the president had a meeting with nancy pelosi and chuck schumer, it was quite a sight, what has happened since then? >> not money developments. -- not many developments. this is ultimately going to be decided by the quach of people in that room, chuck schumer nancy pelosi vice president pence and the president himself. this is a situation many retiring lawmakers dread because it really could come down to the wire on december 21. the president calling for $5 billion in border wall funding. lawmakers in the house and senate say they only have about 1.3 6 billion allocated. another potential problem for the president, while politically it might help him with his base and it helps the democrats with their base to have that type of political theater in the oval office, the map is very complex because the president wouldn't -- the math is complex because

the president would have to get democratic senators on board in the senate to get that vote. get that vote. that does not exist right now especially with democrats feeling emboldened as they are set to take over the house of representatives on january 3. david: we had mitch mcconnell yesterday calling for a christmas miracle, it doesn't sound the key was enthusiastic about shutting down the government. >> correct. whoer mcconnell is someone has been consistently saying and privately forecasting that it would be difficult for republicans to muster through a $5 billion immigration package. in this short time between now and the new congress. the calculation from the white house is clear and simple. they believe that by not backing down a partial government shutdown on december 21 would reactivate their base as well as draw clear political battle lines heading into the new congress where democrats are saying they will investigate as well as legislate. david: before we go to london we

want to break some news. hashen -- michael cohen been sentenced in lower manhattan. sentenced to three years. he was charged by the district with taxs office evasion on related to the special counsel investigation. he has been sentenced to three years. prosecutors said don't give him any leniency because he did not give us the truth. i want to go back outside of parliament to alex. i want to play for you a bit of what prime minister theresa may said this morning in the parliament at question time. here is theresa may. that would no doubt go beyond the legislative date of the 21st of january and it would mean that were a new leader to come in that one of the first things they would have to do would be to extend article exceed article 50 which would mean delaying or stopping brexit. david: what she said there is

that if you replace the you will delay brexit, we will never make that deadline in march. as a practical matter issue right? -- is she right? by the headseeded of the party or parliament does that mean they will not make their deadline? >> certainly it would take a while to elect a new leader. there would not be the time to pass legislation to parliament. if they want to go back and renegotiate a new deal there certainly is not time for that. they would probably have to extend article 50 which the eu has indicated it would be willing to allow only under certain conditions. prevails andme she remains the prime minister. is her hand strengthened in trying to get that deal through maybe with some modification from brussels? is she in a stronger position to get the brexit deal through? parliamentematics in remain exactly the same even if she wins the leadership --

confidence vote this evening. there are still a majority in parliament who oppose a deal. all the opposition parties have said they would oppose it. the dup has said they won't vote for it. she has brexiteers in her party that will back a deal. won't back a deal. the math remains unchanged unless she can get significant changes to the deal. david: thank you so much, coming to us from a very rowdy westminster in london. i don't envy you being in that position. let's get a check on the markets. >> less rowdy here as we see what a difference a day makes. green across the screen as the u.s. equities join a global rally. percent,ones up 1.6 same for the s&p 500 and the nasdaq up over 2%. seemstalyst in the u.s. to be improving relations between china and the u.s. with regards to the trade war.

we get reports china is making key concessions including giving foreign companies greater access to markets. when we look at who is leading the charge it is tech at the moment, that is why we see the nasdaq up and it is the leading sector on the s&p 500. i want to take a look at this rally in a broader context, in the context of the last few days. this is the s&p 500 over four days. over the past three days, we started the day in the green and we saw that rally quickly get sold off. that does not appear to be happening today. it looks like the rally could be sticking for the moment. investors want to see the upward trajectory continued. i mentioned some leaders were attacked. let's look at who is leading. .t is the faang plus microsoft same forup over 3%,

amazon, netflix up over 5% and google up 2.5%. they are all rising on the year but a lot of them have fallen from those highs. david: thank you, emma. breaking news. michael cohen has been sentenced to two years in prison -- three years in prison in downtown manhattan. not so good news for mr. cohen. >> i think he tried to take some half steps and they failed him. he tried to go operate and help after pleading guilty without a deal and in the and efforts by his lawyers to say he deserves a lot of credit for that and will continue to cooperate work enough to get him the kind of leniency he sought. he will serve three years in prison beginning in march for the crimes he committed. david: there are two separate investigations. one of them is for lying and task of asian -- tax evasion, desk another is

with the special counsel in washington where he seems to be cooperating. he withheld some from the special counsel about personal business dealings. >> we know there are two investigations that we don't know the extent of the investigations in new york which is why we are hasn't to say what he did not provide. the business dealings with in-laws come on the schuster men's and taxi businesses, he admitted to bank fraud and tax evasion. the southern district in new york is investigating campaign-finance violations. we don't know the extent of that, what that might take into account. we have learned of several different instances of campaign misdeeds. one involving money from the trump foundation that was used in iowa in the election in violation of campaign finance laws. the way these payments were handled to the women who accuse the president of having sex with them. david: you said they are half steps. he did not enter into a cooperation and with the southern district u.s. attorneys office in which you say i will

tell you anything. he did not do that. he said i will play coy. >> it was never a deal. his lawyers said in court that to doance ready that, inquiries that would last for years. why he did not do that until now. the judge set i don't take into account cooperation you might provide in the future. i'm here to sentence you on what you have done. it seems like a miscalculation on his part. >> this is an extraordinary case. this man was close with the president of the u.s., donald trump. is this an unusual case as these prosecutions go? in general you don't do well not being straight with prosecutors. >> from previous filings even in his first interview with the mueller team which we know came to a lie he was not honest with them. after he pled guilty and said he would help they say he has been credible since then and honest and forthcoming since september. the distinction was that in the

core russia investigation the special counsel is running he has supposedly been completely forthcoming and there are no accusations of problems. they did find him guilty of lying to congress. we don't know what he has been holding back on. i thought the most interesting attempt to explain why cohen did is that hete early was not sure mueller's team would laughter survive. what would be the point -- would not last or survive. what would be the point of cooperating if the team would close down. was audibly emotional with his family, in-laws, his wife and child, taking full responsibility. some interesting comments that he felt he had to cover up the misdeeds of his boss. he said the irony is, today, i foreing unchained and free the first time, on the day he is sentenced to prison. he said ever since he agreed to work for a wealthy real estate mogul he had been incarcerated

in a web he did not anticipate. david: the judges now say he has to surrender march 6 for incarceration. what message does this send to other people who may be hesitant in collaborating with the southern district u.s. attorneys office or with robert mueller? >> the most important thing is you can't keep a foot in both camps. if you're going to do it you better do it and do it early. whatever cohen was able to give the special counsel they said he was forthcoming and provided information, it doesn't seem like they gave him things he was not able to get elsewhere. it wasn't enough to change the arc of their investigation. people who cooperated early like michael flynn, the government is recommending no prison time for him. also taking into account the rest of his lies. cooperate early and be forthcoming. david: there is the special counsel investigation which is clearly ongoing. know whether this aspect of the investigation, the

southern district office ends with mr. cohen? do we know if there are other investigations related to mr. trump or the trump organization in the southern district as opposed to mr. mueller? >> we know the southern district is continuing to look into these federal election violations. we don't know what that includes. we don't know the true breath of that inquiry. goes beyond karen mcdougal and stormy daniels and payments that may have been made in violation of campaign finance laws. supposedly granted immunity in order to collaborate. we have not heard from him. david: thank you, so much. always good to have you on. when he o'kelly, we will keep on the story as it develops. this is bloomberg. ♪

david: this is balance of power and i am david westin. we turn to mark crumpton for bloomberg first word news. president trump's former lawyer has been sentenced to three years in prison. tohael cullen pleaded guilty a baiting taxes, lying to congress, bank fraud and campaign-finance violations. cohen told the judge he takes full responsibility for his actions and that he felt it was his duty to cover up what he dirty president trump's deeds. and massive manhunt involving hundreds of police and soldiers continues in france for a suspected extremist who went on a shooting spree yesterday around one of europe's most famous christmas markets. officials say the assault in the eastern city of strassburg killed two and left one person brain dead. authorities identified the suspected gunman as a 29-year-old frenchman with a long police record.

the biggest political threat to british prime minister theresa may. a confidence vote on her leadership today also means more chaos for him brexit. members ofat parliament will vote on whether they have confidence in may. if she loses there will be a leadership contest. the rebels who want her out will be putting it brexit at risk she says. we will look at this story in a moment. change anrtedly will industrial policy the trump administration has criticized as protectionist or it according to the wall street journal beijing will replace it with a program that will provide greater access for foreign countries. the plan would play down china's desire to dominate manufacturing. news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton this is bloomberg. david: british prime minister

theresa may began her day defending herself in front of an unruly parliament. fighting to keep her position as leader of the conservative party. seniorome nicolas dungan fellow at the atlantic council. great to have you with us. let's start with england and move over to france. talk to us about theresa may. we are told the number has changed, that she needs 159 votes to remain in her position. what are the consequences if she is displaced? all she seems to be very close to not being displaced. the first consequence is if she is not displaced then everything starts all over again. anything likeave a majority in parliament for the brexit deal. if she is displaced then we have a leadership contest within the conservative party.

this is something we have seen before. margaret thatcher ceased to be prime minister. once the members of parliament are elected they are sovereign. when you have a leadership contest within the conservative party, the largest party but a full majority, that would take time. the party and the country would split further. i think theresa may is right about that. the europe research group, jacob rees-mogg, the people who are against any kind of softer brexit which is essentially what the deal is with the which all agreement would continue to oppose it. the labour party would continue to oppose. whoever the new prime minister was you could have various choices from the senate. and then there are the more radical ones such as boris johnson. there is no indication that there is anybody who could do a better job than she is of at

least trying to pull things together. the other thing that would would is that the timing mean that britain would probably have to go back to the european commission and ask for extra time. essentially the european commission has seen britain waste enormous amounts of time ever since article 50 was invoked. stays or to address your question whether she has to go, i think this looks unlikely, the situation will remain uncertain. just one other thing to underscore. if she survives this leadership contest she cannot be displaced for another year. a new leadership contest cannot be brought against her for another year. on the other hand during that year she still has all the divisions in parliament and the country and the need for the support of the dup.

everything that was uncertain as of yesterday before this leadership contest was triggered remains uncertain tomorrow. david: let's look at another uncertainty that is located in paris. macron there is a political aspect to this. admission -- there is also an economic part. as he has tried to dig himself out of it he is incurring more a deficitroposing much larger as a practical matter that is cutting into france's bond situation. how difficult is this situation and can he pull off this new budget that would have as high as 3.4% deficits? >> first of all you go to 3.5% for one year. the italians are at 2.5%. the french would obviously have to support the budget

flexibility. -- the budget flexibility the italians asked for. if we want to connect press get ofbrexit and macron both them stem from issues that have been around and have been unaddressed for the last 40 years. on the u.k. side the divisions within the conservative already in particular -- conservative party in particular over the u.k. being part of the european union have been there and have been unaddressed. the second thing that unites these has been an unwillingness for the leaders to tell the truth. one thing that theresa may could have done would be to say there is no way that if we proceed with brexit that we will be as well off as we would be within the european union. and i have written and said this to bloomberg journalists and including to you previously, the problem is that macron has not explained to the french people what his policies notand up until now he has

delivered any reforms even though there have been quite a few reforms of more of a technical nature. he has not delivered any reforms that create jobs or make people feel more prosperous. the measures he announced on monday night are pretty old. they put money in people's pockets but only a little bit. a low skilledrd economy without addressing the problem of having to create a high skilled economy. it is very unfortunate that france has not sufficiently addressed the need to invest in its people. andcent study done by ey present study oxford analytic a conference points out that germany, switzerland and austria are well-prepared for further digitalization for artificial

intelligence because they have very high skilled workforces. the basic problem that macron hass is he is had to put short-term measures in front of these people without being able to address the long-term questions. the other thing is, this vandalism, the activity by the orllow vests those who are joining them was simply criminal violence. in to a movement which has used that kind of violence against the property of french people and french businesses, he has probably lost more credibility than he has gained. , he respect to the budget has created a series of problems all over the place. david: we appreciate your time is always. nicholas dungeon senior fellow at the atlantic council. for a quick stock of the hour we talk about goldman sachs and

emma chandra is here to tell us all about it. have brokennd banks a five-day losing streak and are up again today. that may be a little bit to do with the broader rally we are seeing. especially if you take a look at the bloomberg. i have the s&p 500 imap. among the worst performers. we have seen a number of downgrades and analyst action from a lot of banks today. it seems they have in managing to catch a bit with the rest of this rally. david: so much for president trump being good for banks. >> exactly. all the deregulation and tax cuts, the trade war has caused a lot of problems because it means loan growth has been slower than expected. david: thank you, emma, we appreciate it. we will bring you much more on the hotel and sentencing coming up. this is bloomberg. ♪

david: breaking news. has said she will tell tory lawmakers that she will not run in the next election. as we know, there are enough

letters to require a little of her own party -- to require a vote of her own party. she will meet with him to tell them to remain with her as the leader, but she says she will say to them that she will not stand for reelection. now for first word news. mark: president trump's former lawyer has been sentenced to three years in prison. michael cohen pleaded guilty to nine felonies, including evading taxes, bank fraud and campaign finance violations. fullys he takes responsibility for his actions and they felt it was his duty to cover up what he called president trump's dirty deeds. withhaskell is speaking house members today on the murder of jamal khashoggi. the senate is preparing for a possible vote on two resolutions that would rebuke saudi arabia for its role in the killing. mike pompeo and jim mattis are

scheduled to brief the full house on the murder tomorrow. the journalists who have been ritical of the regime -- great lawmakers have canceled pension cuts that were going to take effect next month. the measures would have seen more than half of greece's pensioners suffer monthly losses of at least 14%. greece's third and final bailout ended in august. the country has pledged to continue fiscal policies for years, he returned for lenders promising to ease payment terms on existing loans. florida officials say that hurricane michael caused more than $4 billion in losses. the office of insurance regulation says that insurers have handled more than 30,000 claims. by far, the largest number, more than 79,000 came from way to

county where the hurricane came up short in october. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. david: thank you. , the primews minister of the u.k. is said -- she hasn't said she will tell her tory lawmakers in a couple of hours that she will not run in the next election. and we welcome alastair campbell in westminster. he was press secretary to tony blair when he was the prime minister. and he also ran his campaign. thank you so much for your time. so, give us your perspective. it is the other party that you are part of, but you are at number 10, you are in a leadership position. she says that she will not run, will this save her? >> i do not think she was ever going to run, because she did so

badly in the last election. one reason she is in this mess, is because her predecessor david cameron won the majority, she became the prime minister after he lost the referendum, and she alone decided she was so popular and pre-brexit plans were so great, she would have the message of strong and stable, every vote you give me strengthens my hand in negotiations. she lost majority, became reliant on a small party from northern ireland which has been bargaining very hard, and she is now a mess where she is losing authority because what she negotiated pleased nobody. so i do not think of her that much. all of this stuff coming out, that the colleagues are crying at the moment. making.all her own she was given a bad deal when she became prime minister, and she has made some missteps, but brexit is destroying itself and

the sooner she understands that and both the main parties understand that this is going to go back to the people, because the mood is growing in the country frankly not to do this. david: before we get to a new referendum, something that tony blair has been advocating, before we get to their, -- there, we have an old saying here, you cannot beat something with nobody. thre is no real alternative, the within her own party, it is not clear who would step up. and a lot of people are not enthusiastic about corbyn on the other side. >> that is true. and i think that she probably, i am sure she will survive this vote tonight, even though it is a secret ballot and all of these mp's have said they will vote for her. not all of them will. and it is true the other people that are trying to put themselves forward in the fray, none of them are really on the side of the public or can really

inside the party. i think that the problem is, it is not just about the fact she is not a good prime minister and has done bad negotiations, brexit is the problem. what negotiations have shown is that there is no way of doing this brexit without doing fundamental damage to our economy, our public services and our standing in the world. and the chaos we are living in here, i do not mean the literal, physical chaos of people shouting at each other, a government out of control, the prime minister changing whileements day by day, while some other wheel falls off the bus, i mean unless we actually face up to the truth that brexit cannot be do without damaging the country, this is going to continue. david: there seems to be a good number of people over there, leaders and rank-and-file who agree with your position. we are looking at westminster in the heart of london, loaded

voted differently on the referendum than much of the rest of the country. is there a way to get to a new referendum that could reverse brexit without cause a new populist problems across the country with more people out away from london saying, wait a second, we said we wanted to leave and now you will not let us? >> just to be clear, there are plenty of places outside of london where hundreds of thousands of millions of remainders. scotland voted overwhelmingly to stay in the news -- in the european union. most big towns and cities voted to stay in the european union. the country is divided, no doubt about that, but the idea you have london, many people in london did not want to leave. so it is not as simple as that. the point is the referendum of 2016 was one of delusions and lies in unicorns. now that we know so much about brexit, what it would mean, i think it is possible to go back

to the country -- yes, it will be difficult and divisive -- but to go back and say given what we know now, do you want to proceed? and as long as my side of the argument understands, and is sympathetic to the reasons why people voted leave. because the other tragedy is that while the government is consumed with the brexit, you can walk 100 yards from here and you will see people sleeping on the streets, we have standards going down. and the national health service is heading toward a crisis, prisons are in crisis, and we have a government fixated on trying to make sense of this decision. it is for into half decades -- it is four and a half decades that has served us well, but until people understand the global inequality, that is not going to be addressed by brexit, it will be made worse.

david: we appreciate your time. that was really compelling. alastair campbell, thank you. all the way from london to china. u.s. china relations. the stock has moved up today on a wall street journal report that "the top planning agency in china are drafting their replacement for made in china 2025. the plan would play down the bid to dominate not -- to dominate manufacturing and be more welcoming to foreign countries." we welcome the former u.s. ambassador to beijing, also by the way the former department head of commerce secretary and also former governor of the state of washington -- gary, thank you for your patience. tell us about what you make of this report in the wall street journal, assuming it is true that they will modify their made in china 2025 plan, how significant could that be? >> i think that first of all it

is great they are having these talks, great that china is talking about rolling back some of the retaliatory tariffs they imposed on u.s. automobiles from the current 40% to the level of 15%. so the fact that they are having negotiations is good news. china needs to modify their maiden 2025 policy. it is unfair subsidies to a host of industries that they want to be world-class in, whether it is robotics, electric automobiles, semiconductors, biotechnology and so forth. but i do not think the chinese will back away from their overall plan of wanting to be world-class leaders, because so much of what they use in the high-tech area comes exclusively from the united states. so what obama, and even when trump have threatened to stop u.s. companies from selling very sophisticated chips, or qualcomm

chips used in cell phones, it would have bankrupted a lot of chinese companies. so the message is, we need to double down on this made in china 2025 policy of being more self-reliant on our own manufactured items and high-tech areas. maybe the chinese will let foreign companies provide some of these things, but provided that they are made inside of china instead of being exported from the united states to china come in case the u.s. were dead ban these u.s. companies from selling to china. david: you were in ambassador and you have dealt with the chinese, there is an impression they have a tendency to say really pleasant things across the table, to assure things we want to hear, but then it does not get done on trade. wto, not ande got done that they promised, so how do we make sure that they deliver on their promises and negotiations? gary: that will be the tricky

part of these negotiations, what will be the firm commitments with specific dates and goals or measures that the chinese commit to, and by what particular date. i'm sure that the administration will continue to keep the tariffs we have imposed on chinese goods coming into the country as a condition for seeing some of this progress. david: let's turn to a different part of the u.s.-china relations, the largest telecoms company in the world at this point, huawei, and the arrest of the cfo. she is out on bail. president trump was asked about this in an interview yesterday, about whether he will let her go if we got a trade deal. part of what he said, whatever is good for the country is what i will do. if it would be good for the largest trade deal ever made come i would intervene if necessary. i really wonder, is that a constructive approach?

it was thought that this was a law enforcement matter, they were handling it like we looking trade on this side, and keep that on the side, but now we could negotiate our way out of law-enforcement problems, according to the president. gary: it is good that she is out on bail. i think that electronic monitoring and so forth, she has a lot of property in vancouver and british columbia, so she will not be a flight risk. so i think it is lowering the temperature. but we need to keep the two separate however, because i am concerned if we give the impression that people are arrested for political reasons, and that their prosecutions can be solved by using political pressure, that also lessens the respect that people have for our american system of rule of law. i'm a formal criminal prosecutor, so i am concerned when i hear that politicians,

whether left or right, are interfering and getting involved in criminal prosecutions. now, whether or not she should have been prosecuted in the first place is another question. because, when have we prosecuted high-level executives of companies that have violated iran sanctions? when have we prosecuted high-level ceos or management managementthe -- or in terms of the wall street problems we had during the collapse of the economy? and what will happen when european countries continue to honor the iran accord and do trade with iran? will we start indicting and charging ceos, cfos, top management of european companies because they are violating u.s. sections on iran? this is a very tricky issue, a very delicate issue. but we need to lower the temperature. we need to be very careful about saying that presidents can get involved in criminal

prosecutions to solve trade issues. david: finally, do you see a way out, do you see a way for us to come to terms with china that does not relinquish the vital national interests of either country? gary: the united states, and u.s. companies, they are not just u.s. companies but foreign companies and governments have serious concerns about the trade policies of china. their investment policies, the forced transfer of technology that companies have to hand it over to their joint venture, or their chinese partners. part of it is because some a price of the chinese economy are off-limits to foreign investment. and where it is allowed. it can only be was less than 50% foreign ownership, which means you have to have a chinese partner. and when you have to have a chinese partner, you have to share the technology. that is part of the rub. if china was able to move to open up more markets and allow

foreign companies to have controlling ownership, and not have to have a chinese partner -- if the foreign companies want to have a partner because it is good business sense, that is their decision, but they should not be forced to and forced to transfer technology. iff we can get to those issues -- if we can get to those issues, there could be progress for chinese company's and u.s. companies. more jobs for the american people and chinese people. and we can start cooperating on the more fundamental issues of facing the world, whether it is north korea, whether it is climate change, finding cures for diseases. there are many areas of cooperation. and more important, china is america's largest export destination for so many of our products and goods. american farmers export more to china than to any other country. and china depends on a strong u.s. economy in supplying high quality, low-cost goods for american consumers, which means

more money in the pocketbooks of americans that they can spend on retirement, college education, you name it. our economies are interdependent and we have to solve this thing, we have to avoid a trade war and focus on other matters that are crucial to the economic and security interests of both the u.s. and china. david: thank you so very much, gary locke. the former ambassador to china under president obama. this is bloomberg. ♪

david: this is "balance of power." it has been 10 years since bernie madoff was sent to jail for his ponzi scheme where hundreds lost billions of dollars. and to the suppressive everybody, many of those people have gotten much of their money back. with more on the way, we welcome stephen harvick, the ceo of the securities investor protection, the company that insurers

companies against these dealers. welcome, good to have you. >> good to be here. david: this is extraordinary. if you look at the amount of that was, the amount given over, something like 70% of return at this point. >> that is right, people thought that they had $67 billion on deposit with bernie madoff, but the real amount of money, then that money -- the net money in was about $17 billion. the trustees recovered 13 using giveolls -- the tools him, largely that is to recover assets from those people who took more out of this game than they put in. david: these people took out more, but they did not realize it was a scheme, they did not realize they were taking more, they thought it was earnings. but you can go back to those people and say, you thought you

made that money, you did not you do have to give the extra back? >> that is correct. this is where the human tragedy comes in. those people organized their lives around the fact they had real profits, when in fact there were never any assets beyond which they put in. so to make one other comment, some of the people may have known and that is part of the reason why we have a very healthy fund that the trustee can now distribute to all the people who left the money there. david: 70% back of the principle that was contributed, but i understand you are not done. how much further can you go? >> we are hopeful that we can get to a much higher percentage. the reason for that is there is one outstanding appeal before the second circuit court of appeals in new york, which if the law is interpreted the way

it should become of the trustee can go after funds that have been shipped overseas and recapture those. there are billions of dollars there. and we look forward to the court's opinion, so we can perhaps reach further and make that percentage much higher. david: from this experience, what have you learned that can benefit us in the next ponzi scheme or next major bank going bankrupt, what can we take away and apply in the future? >> one of the most difficult things about them bernie madoff situation was he was a so she'll path. and -- he was a sociopath. and he was a good one in how convincing he was. it is difficult to prevent something like that from happening. but one thing the regulators are focused on is actually verifying that assets that are supposed to be with a specific brokerage firm are in fact present and there. bernie made off was never more

than one phone call away from being exposed. and i am quite sure that the securities and exchange commission, and the treasury and other regulators now make that call every time. david: should they have caught him? there are reports there were warning signals. >> it is so hard to say. did have somels knowledge of what he was doing, but most of the people put their trust in one man. that is an excellent argument for diversifying. it is an excellent argument for the old saying of trust, but verify. and there are a wide variety of ways to verify that the assets are in fact present. david: thank you very much for joining us, a fascinating case. stephen harbeck. broke ay, mike pence tie in the senate to confirm a new judge for the u.s. court appeals for the its circuit,

which may not seem surprising, but the nominee had been rated by the mccain" bar association and it turns out he is one of several such judges who have been put on the bench over aba objections. we welcome our colleague now patrick gregory, to explain what is going on. what is going on? >> it is part of the continuing escalation of the rate at which whheorms are disappearing itn comes to confirming judges in the senate. kobes is one of a four judges who have been confirmed, despite a nonqualified rating. two others did not make it on the bench. david: for those who do not know, historically the american bar association goes and reviews the nominees and their records, use what they have done with their experiences and they give a rating. there are different ratings they can give, it historically it has been important. why do they give the ratings if

they are going to be ignored? >> the administration has decided not to participate in the preclearance process. but that does not mean that nobody cares about the aba's ratings. i think the administration is happy to have them come as they did for brett kavanaugh. but it is certainly not going to let a nonqualified rating stop it from putting yet another nominee on the federal bench. david: democratic senator dianne feinstein has tweeted about this, and has filed greeks -- griefs. circuit courts are where most americans receive final justice and they deserve to have qualified experienced judges presiding, she says. i worked for a year for a court of appeals judge and i cannot imagine how difficult it would be for a judge to just do the job, forget about left or right ideology, just do the work if

you are not familiar with these briefs, because there is a lot of paper to write. patrick: certainly. the aba cited a lack of experience and writing experience, they said we do not have the evidence to say he is qualified. but i will point out that the nominee, kobes, he did go to harvard law school and he did clerk for a judge on the eighth circuit. david: fascinating. are there more nominees pending who have been rated "not qualified?" patrick: not that i know of, but i would not be surprised if there are more going forward. donald trump has been able to appoint 30 judges to the courts, as diane feinstein mentioned, that is the last out for most people in court and most people will not reach the u.s. supreme court. republicans will have more senate seats next year, so not much to stop them from confirming whoever donald trump nominates. david: it did not hurt that he

worked in the senate either. patrick: absolutely. he did work for a senator. david: thank you very much. sign up for the balance of power newsletter at bloomberg politics.com. get the latest on global politics in your inbox every single day. coming up, continuing coverage as the u.k. prime minister faces a confidence vote. that will get under way short time from right now. bloomberg television will bring you all the details. you can interact with the charts shown by going to gtv . this is bloomberg. ♪

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scarlet: i'm scarlet fu. this is "etf iq." this is the show where we focus on the assets, risks and rewards of exchange traded funds. ♪ scarlet: investing through ongoing brexit trauma, french protests and eat italian budget woes. we take a look at europe. and how much does a performance in the past matter? on the a scorecard ability to consistently outperform. and health care is the best performing sector in the second